- Harley-Davidson‘s profit plunged as President Donald Trump’s tariffs hurt sales.
- The company is also contending with decreased demand as their core customer ages.
- Watch Harley-Davidson trade live.
The motorcycle manufacturer Harley-Davidson reported quarterly operating profits plunged almost 27% from a year ago as it contended with decreasing demand for its core product as well as the impact of tariffs from both the US and Europe.
Operating earnings fell from $173 million to $108 million while revenues declined 12% to $1.2 billion. Total motorcycles sold slid 4% as demand for higher-priced models fell sharply.
Despite the drop, the company still beat analyst expectations for adjusted earnings, as compiled by Bloomberg. Adjusted earnings of $0.98 a share were well ahead of the $0.86 that Wall Street was expecting.
The company’s shares were up 2% on the news. Over the past few years, the company’s share price has lagged as its core customer base ages and younger generations are less interested in buying motorcycles. The company plans to introduce a high-end electric motorcycle priced at $30,000, later this year.
"During the first quarter we intensified our march by investing in our future and adding capabilities that we’re confident will inspire riders today and for generations to come," said CEO Levatich.
US tariffs on steel have impacted the company through rising raw material costs while tariffs from Europe and China have limited exports, impacting revenue. The company estimates the costs of the European and Chinese tariffs impacted operating earnings by $21 million.
"Harley Davidson has struggled with Tariffs with the EU, currently paying 31%," President Donald Trump tweeted. "They’ve had to move production overseas to try and offset some of that Tariff that they’ve been hit with which will rise to 66% in June of 2021." @MariaBartiromo So unfair to U.S. We will Reciprocate!"
Harley-Davidson shares were up nearly 20% year-to-date.
Markets Insider
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Source: Business Insider – areddy@businessinsider.com (Arjun Reddy)